Panasonic, a Japanese electronics group, has lowered its annual profit forecast for its battery division by 15% due to lower than expected sales of Tesla's high-end electric vehicles, one of its most important customers.
As soon as the news spread, Tesla bucked the trend and closed down 4.79% on Monday at $197.36 per share, setting a new low since the end of May. It is worth mentioning that Tesla is also the only company in the top 20 US stock market to end down today.
Specifically, Panasonic lowered its annual operating profit forecast for its battery division from 135 billion yen to 115 billion yen, due to a slowdown in demand for Tesla electric vehicles in the North American market. According to the Inflation Reduction Act (IRA), some high-end electric vehicle models of Tesla do not qualify for tax incentives.
Panasonic's Chief Financial Officer Hirokazu Umeda said on Monday, "The price limit for IRA subsidies is $80000, and demand has decreased due to high-end models exceeding this level
He stated that Panasonic has reduced its production of car batteries in Japan by 60% compared to the first quarter in an attempt to restore inventory to normal levels. The company produces batteries for more expensive Tesla models such as Model S and Model X.
It is worth noting that Tesla has also reduced its emphasis on some of its models and withdrawn them from right-hand drive markets such as the UK to promote its more affordable Model 3 and Model Y models.
I think we can expect some recovery. However, we still haven't anticipated significant growth like American factories. Therefore, we will operate Japanese factories based on this assumption, "Umeda added.
It is reported that Panasonic's factory in Nevada, USA provides batteries for some Tesla models that benefit from IRA. Panasonic is investing billions of dollars to build a factory in Kansas.
US President Joe Biden's IRA policy has sparked significant investment in the US battery manufacturing industry, but currently most new electric vehicles produced in the United States have not yet qualified, either because they are too expensive or because their batteries are still imported.
Panasonic has previously issued a warning on global demand for electric vehicles. Tesla, General Motors, and Ford have slowed down the expansion of their electric vehicle factories due to rising financing costs and weaker than expected economic growth in regions such as Europe, which is expected to weaken demand for cars.
Last week, South Korean battery manufacturer LG Energy Solutions responded to Tesla CEO Elon Musk's warning and warned that electric vehicle sales are expected to weaken due to rising interest rates.
Umeda also stated on Monday that in the second quarter ending in September, if IRA subsidies are excluded, the automotive battery business will experience losses. The department's sales revenue is 185 billion yen (excluding subsidies), while the entire group's sales revenue is 2.1 trillion yen.
Although the market expects an improvement in demand for electric vehicles in the United States, Panasonic has lowered its revenue forecast for the fiscal year ending March 2024 from 430 billion yen to 400 billion yen.